Forex Market: USD/CAD daily forecast

During Friday’s trading session USD/CAD traded within the range of 1.0660-1.0696 and closed at 1.0663.

At 11:35 GMT today USD/CAD was gaining 0.17% for the day to trade at 1.0681. The pair touched a daily high at 1.0688 at 9:50 GMT.

Fundamental view

United States

The Chicago Purchasing Managers Index (PMI) probably slowed down to a reading of 63.0 in June from 65.5 during the prior month. The index reflects business conditions in regions manufacturing sector and is interrelated with the Manufacturing Index, published by the Institute for Supply Management (ISM). A reading above the key level of 50.0 is indicative of expansion in manufacturing activity. In case the PMI exceeded forecasts, this would heighten the appeal of the US dollar. The MNI Deutche Börse Group will release the official reading of the Chicago barometer at 13:45 GMT.

The index of pending home sales in the United States probably surged 1.2% during May compared to April, according to the median estimate by experts, following another 0.4% increase in April compared to March.

When a sales contract is accepted for a property, it is recorded as a pending home sale. As an indicator the index provides information on the number of future home sales, which are in the pipeline. It gathers data from real estate agents and brokers at the point of a sale of contract and is currently the most accurate indicator regarding US housing sector. It samples over 20% of the market. In addition, over 80% of pending house sales are converted to actual home sales within 2 or 3 months. Therefore, this index has a predictive value about actual home sales.

Although there are some cancellations, there are not enough for the data to be skewed one way or another. The base value of the index is equal to 100, while the base year is 2001, when there has been a high level of home sales. The National Association of Realtor’s (NAR) will release the official index value at 14:00 GMT. In case pending home sales increased more than anticipated, this would have a bullish effect on the greenback.

Canada

Canadian Gross Domestic Product (GDP) probably expanded 0.2% in April compared to March, according to the median forecast by experts, following another 0.1% increase in March compared to February. Canadas economy grew at an annualized pace of 2.1% in March. The GDP represents the total monetary value of all goods and services produced by one nation over a specific period of time. What is more, it is the broadest indicator of a countrys economic activity.

The report on GDP holds a lot of weight for traders, operating in the Foreign Exchange Market. It serves as evidence of growth in a productive economy, or as evidence of contraction in an unproductive one. As a result, currency traders will look for higher rates of growth as a sign that interest rates will follow the same direction. Higher interest rates will attract more investors, willing to purchase assets in the country, while, at the same time, this will increase demand for the national currency. If an economy is experiencing a robust rate of growth, the benefits will eventually affect the end consumer, because of the increased likelihood of spending, while through increased consumer expenditures economy has the potential to expand even further. Therefore, in case Canadian growth outpaced expectations, this would heighten the appeal of Canadian dollar. Statistics Canada is expected to release the official figure at 12:30 GMT.

Technical view

According to Binary Tribune’s daily analysis, in case USD/CAD manages to breach the first resistance level at 1.0686, it will probably continue up to test 1.0709. In case the second key resistance is broken, the pair will probably attempt to advance to 1.0722.

If USD/CAD manages to breach the first key support at 1.0652, it will probably continue to slide and test 1.0637. With this second key support broken, the movement to the downside will probably continue to 1.0614.